An illustration of the “bitcoin,” a virtual currency presently selling for more than $90 U.S. Dollars.

More than $1 billion dollars worth of a digital currency known as "bitcoins" now circulate on the web – an amount that exceeds the value of the entire currency stock of petite countries like Liberia (which uses “Liberian dollars”), Bhutan (which uses the “Ngultrum”), and eighteen other countries.

So what is a “bitcoin,” and why would anyone use it?

Unlike traditional currency, bitcoins are not issued by a government or even a private company. Instead, the currency is run by computer code that distributes fresh bitcoins at a set rate to people who devote web servers to keep the code running. The bitcoins are then bought and sold for regular U.S. dollars online.

'They buy gold, they put it under the mattress, or they buy bitcoin.'

– Tony Gallippi, the CEO “BitPay.com,

Bitcoin is in high request right now — each bitcoin presently sells for more than $90 U.S. dollars — which bitcoin insiders say is because of world events that have shaken confidence in government-issued currencies.

“Because of what’s going on in Cyprus and Europe, people are attempting to pull their money out of banks there,” Tony Gallippi, the CEO “BitPay.com,” which enables businesses to lightly accept bitcoins as payment, told FoxNews.com.

In Cyprus, the government is considering taking a percentage of all citizens’ bank accounts to solve its fiscal woes. That has led Cypriots — and other Europeans worried about the same thing happening to them — to take their money out of banks.

“So they buy gold, they put it under the mattress, or they buy bitcoin,” Gallippi said.

Bitcoin request has also enhanced, Gallippi says, because last week U.S. regulators issued the very first official guidelines for private digital currencies. Prior to the regulations, the legal status of the currencies was in doubt.

“Now people can see that it’s not illegal, that it’s not banned,” Gallippi said.

Bitcoin is controversial because the currency can be exchanged anonymously online — it is in a sense the digital equivalent of using hard cash — and so some have criticized it for facilitating online drug markets. On the site known as "the Silk Road," for example, users pay bitcoins for illegal drugs and other prohibited items.

Bitcoin Targeted by Cyberattack

Just as Bitcoin explodes beyond the $1 billion mark thanks to Europe’s debt crisis, the emerging virtual currency was dealt a setback this week after a key exchange was hit by a powerful cyber attack that caused delays.

In a two thousand eleven letter to the Attorney General, Senators Charles Schumer (D-NY) and Joe Manchin (D-W.Va.) argued for stringent enforcement.

“After purchasing bitcoins through an exchange, a user can create an account on Silk Road and embark purchasing illegal drugs from individuals around the world and have them delivered to their homes within days,” the Senators wrote. “We urge you to take instant activity and shut down the Silk Road network.”

But the Silk Road is still running, and a latest explore estimates that $23 million dollars of illicit items are sold for bitcoins on the site every year.

The regulatory guidelines issued last week by the government agency known as the Financial Crimes Enforcement Network (FinCEN), however, will not stop that.

The regulations say that digital currencies like bitcoin are to be treated essentially as foreign currencies. Companies that exchange digital bitcoins for real money will have to serve with the same regulations as traditional currency exchangers — namely, they must verify the identity of anyone exchanging money for bitcoins and report large transactions to the government.

Using bitcoins to purchase goods, however, is specifically exempted.

“A user who obtains convertible virtual currency and uses it to purchase real or virtual goods or services is not… under FinCEN’s regulations,” the guidance reads.

Some bitcoin defenders say the use of bitcoins to buy illegal items shouldn’t obscure the legal uses.

“With any technology… Criminals are going to use it for something, and regular people are going to use it for something,” Gallippi said. “You can’t ban cell phones just because criminals are using them to do drug deals. You can’t ban e-mail just because people are using them to do phishing scams in Nigeria. You have to commence just prosecuting people who are committing crimes — you can’t just totally wipe out the fresh technology.”

Gallippi says one reason to use bitcoins for legal transactions is a lower risk of identity theft.

“If you are buying something online and you have the choice of paying with a credit card or bitcoins – think about what you have to do to use a credit card. You have to pack out this entire long form, name, address, account number, sometimes more. coincidentally, that’s all the info a thief would need to steal to pretend to be you.”

Inbetween that, bitcoin’s anonymity, and worries about conventional currency, bitcoin request is as high as ever, according to Alan Safahi, who runs “Zip Zap” – a company that facilitates cash deposits at stores like CVS and Wal-Mart for transfer to a site that can convert the money to bitcoins.

“We’re processing millions of dollars a month. We’ve seen tremendous surge in activity,” he said.

An illustration of the “bitcoin,” a virtual currency presently selling for more than $90 U.S. Dollars.

More than $1 billion dollars worth of a digital currency known as "bitcoins" now circulate on the web – an amount that exceeds the value of the entire currency stock of petite countries like Liberia (which uses “Liberian dollars”), Bhutan (which uses the “Ngultrum”), and eighteen other countries.

So what is a “bitcoin,” and why would anyone use it?

Unlike traditional currency, bitcoins are not issued by a government or even a private company. Instead, the currency is run by computer code that distributes fresh bitcoins at a set rate to people who devote web servers to keep the code running. The bitcoins are then bought and sold for regular U.S. dollars online.

'They buy gold, they put it under the mattress, or they buy bitcoin.'

– Tony Gallippi, the CEO “BitPay.com,

Bitcoin is in high request right now — each bitcoin presently sells for more than $90 U.S. dollars — which bitcoin insiders say is because of world events that have shaken confidence in government-issued currencies.

“Because of what’s going on in Cyprus and Europe, people are attempting to pull their money out of banks there,” Tony Gallippi, the CEO “BitPay.com,” which enables businesses to lightly accept bitcoins as payment, told FoxNews.com.

In Cyprus, the government is considering taking a percentage of all citizens’ bank accounts to solve its fiscal woes. That has led Cypriots — and other Europeans worried about the same thing happening to them — to take their money out of banks.

“So they buy gold, they put it under the mattress, or they buy bitcoin,” Gallippi said.

Bitcoin request has also enlargened, Gallippi says, because last week U.S. regulators issued the very first official guidelines for private digital currencies. Prior to the regulations, the legal status of the currencies was in doubt.

“Now people can see that it’s not illegal, that it’s not banned,” Gallippi said.

Bitcoin is controversial because the currency can be exchanged anonymously online — it is in a sense the digital equivalent of using hard cash — and so some have criticized it for facilitating online drug markets. On the site known as "the Silk Road," for example, users pay bitcoins for illegal drugs and other prohibited items.

Bitcoin Targeted by Cyberattack

Just as Bitcoin explodes beyond the $1 billion mark thanks to Europe’s debt crisis, the emerging virtual currency was dealt a setback this week after a key exchange was hit by a powerful cyber attack that caused delays.

In a two thousand eleven letter to the Attorney General, Senators Charles Schumer (D-NY) and Joe Manchin (D-W.Va.) argued for rigorous enforcement.

“After purchasing bitcoins through an exchange, a user can create an account on Silk Road and embark purchasing illegal drugs from individuals around the world and have them delivered to their homes within days,” the Senators wrote. “We urge you to take instantaneous activity and shut down the Silk Road network.”

But the Silk Road is still running, and a latest examine estimates that $23 million dollars of illicit items are sold for bitcoins on the site every year.

The regulatory guidelines issued last week by the government agency known as the Financial Crimes Enforcement Network (FinCEN), however, will not stop that.

The regulations say that digital currencies like bitcoin are to be treated essentially as foreign currencies. Companies that exchange digital bitcoins for real money will have to conform with the same regulations as traditional currency exchangers — namely, they must verify the identity of anyone exchanging money for bitcoins and report large transactions to the government.

Using bitcoins to purchase goods, however, is specifically exempted.

“A user who obtains convertible virtual currency and uses it to purchase real or virtual goods or services is not… under FinCEN’s regulations,” the guidance reads.

Some bitcoin defenders say the use of bitcoins to buy illegal items shouldn’t obscure the legal uses.

“With any technology… Criminals are going to use it for something, and regular people are going to use it for something,” Gallippi said. “You can’t ban cell phones just because criminals are using them to do drug deals. You can’t ban e-mail just because people are using them to do phishing scams in Nigeria. You have to embark just prosecuting people who are committing crimes — you can’t just downright wipe out the fresh technology.”

Gallippi says one reason to use bitcoins for legal transactions is a lower risk of identity theft.

“If you are buying something online and you have the choice of paying with a credit card or bitcoins – think about what you have to do to use a credit card. You have to pack out this entire long form, name, address, account number, sometimes more. coincidentally, that’s all the info a thief would need to steal to pretend to be you.”

Inbetween that, bitcoin’s anonymity, and worries about conventional currency, bitcoin request is as high as ever, according to Alan Safahi, who runs “Zip Zap” – a company that facilitates cash deposits at stores like CVS and Wal-Mart for transfer to a site that can convert the money to bitcoins.

“We’re processing millions of dollars a month. We’ve seen tremendous surge in activity,” he said.

An illustration of the “bitcoin,” a virtual currency presently selling for more than $90 U.S. Dollars.

More than $1 billion dollars worth of a digital currency known as "bitcoins" now circulate on the web – an amount that exceeds the value of the entire currency stock of puny countries like Liberia (which uses “Liberian dollars”), Bhutan (which uses the “Ngultrum”), and eighteen other countries.

So what is a “bitcoin,” and why would anyone use it?

Unlike traditional currency, bitcoins are not issued by a government or even a private company. Instead, the currency is run by computer code that distributes fresh bitcoins at a set rate to people who devote web servers to keep the code running. The bitcoins are then bought and sold for regular U.S. dollars online.

'They buy gold, they put it under the mattress, or they buy bitcoin.'

– Tony Gallippi, the CEO “BitPay.com,

Bitcoin is in high request right now — each bitcoin presently sells for more than $90 U.S. dollars — which bitcoin insiders say is because of world events that have shaken confidence in government-issued currencies.

“Because of what’s going on in Cyprus and Europe, people are attempting to pull their money out of banks there,” Tony Gallippi, the CEO “BitPay.com,” which enables businesses to lightly accept bitcoins as payment, told FoxNews.com.

In Cyprus, the government is considering taking a percentage of all citizens’ bank accounts to solve its fiscal woes. That has led Cypriots — and other Europeans worried about the same thing happening to them — to take their money out of banks.

“So they buy gold, they put it under the mattress, or they buy bitcoin,” Gallippi said.

Bitcoin request has also enlargened, Gallippi says, because last week U.S. regulators issued the very first official guidelines for private digital currencies. Prior to the regulations, the legal status of the currencies was in doubt.

“Now people can see that it’s not illegal, that it’s not banned,” Gallippi said.

Bitcoin is controversial because the currency can be exchanged anonymously online — it is in a sense the digital equivalent of using hard cash — and so some have criticized it for facilitating online drug markets. On the site known as "the Silk Road," for example, users pay bitcoins for illegal drugs and other barred items.

Bitcoin Targeted by Cyberattack

Just as Bitcoin explodes beyond the $1 billion mark thanks to Europe’s debt crisis, the emerging virtual currency was dealt a setback this week after a key exchange was hit by a powerful cyber attack that caused delays.

In a two thousand eleven letter to the Attorney General, Senators Charles Schumer (D-NY) and Joe Manchin (D-W.Va.) argued for stringent enforcement.

“After purchasing bitcoins through an exchange, a user can create an account on Silk Road and embark purchasing illegal drugs from individuals around the world and have them delivered to their homes within days,” the Senators wrote. “We urge you to take instant act and shut down the Silk Road network.”

But the Silk Road is still running, and a latest explore estimates that $23 million dollars of illicit items are sold for bitcoins on the site every year.

The regulatory guidelines issued last week by the government agency known as the Financial Crimes Enforcement Network (FinCEN), however, will not stop that.

The regulations say that digital currencies like bitcoin are to be treated essentially as foreign currencies. Companies that exchange digital bitcoins for real money will have to conform with the same regulations as traditional currency exchangers — namely, they must verify the identity of anyone exchanging money for bitcoins and report large transactions to the government.

Using bitcoins to purchase goods, however, is specifically exempted.

“A user who obtains convertible virtual currency and uses it to purchase real or virtual goods or services is not… under FinCEN’s regulations,” the guidance reads.

Some bitcoin defenders say the use of bitcoins to buy illegal items shouldn’t obscure the legal uses.

“With any technology… Criminals are going to use it for something, and regular people are going to use it for something,” Gallippi said. “You can’t ban cell phones just because criminals are using them to do drug deals. You can’t ban e-mail just because people are using them to do phishing scams in Nigeria. You have to begin just prosecuting people who are committing crimes — you can’t just totally wipe out the fresh technology.”

Gallippi says one reason to use bitcoins for legal transactions is a lower risk of identity theft.

“If you are buying something online and you have the choice of paying with a credit card or bitcoins – think about what you have to do to use a credit card. You have to pack out this entire long form, name, address, account number, sometimes more. coincidentally, that’s all the info a thief would need to steal to pretend to be you.”

Inbetween that, bitcoin’s anonymity, and worries about conventional currency, bitcoin request is as high as ever, according to Alan Safahi, who runs “Zip Zap” – a company that facilitates cash deposits at stores like CVS and Wal-Mart for transfer to a site that can convert the money to bitcoins.

“We’re processing millions of dollars a month. We’ve seen tremendous surge in activity,” he said.

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